You can withdraw cash from a credit card, but it is not the same as using a debit card
A cash advance is a withdrawal of actual money from your credit card account. You can get one at an ATM, at a bank teller window, or sometimes at a convenience store. The money goes into your pocket or bank account, and you pay it back like any other credit card charge — except with higher fees and interest rates.
The catch is that cash advances are expensive. You pay an upfront fee (usually 3 to 5 percent of the amount you withdraw), and the interest rate on that cash is almost always higher than your regular purchase rate. Interest starts accruing when ready — there is no grace period like there is for regular purchases. If you carry a balance, the cash advance interest gets charged every single day until you pay it off.
Most people should avoid cash advances unless they have no other option. But if you need to understand how they work, or you are considering one, here is what actually happens.
Key Takeaways
- A cash advance charges an upfront fee of 3 to 5 percent plus a higher interest rate than regular purchases, with no grace period.
- You can withdraw cash at an ATM using your credit card PIN, at a bank teller, or sometimes at a store, but each method has different limits and fees.
- Interest on a cash advance starts the day you withdraw it, so the longer you carry the balance, the more you pay in interest charges.
- If you need cash urgently, a personal loan, payday loan alternative, or even a balance transfer to a 0% card may cost less than a cash advance.
Where you can actually withdraw cash from a credit card
An ATM is the most common place. Insert your credit card, enter your PIN (which you may need to set up if you have never done a cash advance before), and withdraw up to your cash advance limit. That limit is usually lower than your credit limit — often 20 to 50 percent of it — and your card issuer sets it.
A bank teller can also process a cash advance. Walk into any bank branch (not necessarily your own bank), present your credit card, and ask for a cash advance. The teller will process it on the spot. This method sometimes has lower fees than ATM withdrawals, but not always — check with your card issuer first.
Some convenience stores and grocery stores offer cash back when you make a purchase, but that is different from a cash advance. Cash back is a debit card feature, not a credit card feature. If you try to use a credit card for cash back, the store may decline it or treat it as a cash advance anyway.
The fees and interest rates that make cash advances expensive
Every cash advance comes with an upfront fee. This is charged the moment you withdraw the money, not later. The fee is typically 3 to 5 percent of the amount withdrawn, though some cards charge a flat fee (like $5 or $10) if that is higher. A $300 cash advance with a 4 percent fee costs you $12 right away.
The interest rate on cash advances is separate from your regular purchase rate. While a regular purchase might carry an APR of 15 to 25 percent, a cash advance APR is often 25 to 30 percent or higher. Your card issuer will disclose both rates in your card agreement, usually labeled as "Cash Advance APR."
Interest starts accruing on day one. Unlike a regular purchase, which may have a 21-day grace period before interest kicks in, cash advance interest begins when ready. If you withdraw $300 and pay it back in 30 days, you will owe roughly $25 in interest alone (plus the $12 upfront fee). That is $37 in total cost for borrowing $300 for a month.
How your credit card company calculates your cash advance limit
Your cash advance limit is set by your card issuer and is usually much lower than your overall credit limit. If your credit limit is $5,000, your cash advance limit might be $1,000 or $1,500. Some cards do not disclose this limit upfront — you only find out when you try to withdraw and the ATM declines you.
You can call your card issuer and ask what your cash advance limit is. They will tell you when ready. Some issuers allow you to request a higher limit, though this is not may provide. A higher limit does not change the fees or interest rate — it just means you can withdraw more money at once.
Why a cash advance affects your credit score differently than a regular purchase
A cash advance shows up on your credit report as a balance, just like a regular purchase does. If you carry it for several months, it increases your credit utilization ratio — the percentage of your available credit you are using. A higher utilization ratio can lower your credit score.
The damage is usually temporary. Once you pay off the cash advance, your utilization drops and your score recovers. But if you carry multiple cash advances or combine them with other high balances, the impact on your score can be significant and last for months.
Cheaper alternatives to a cash advance
If you need cash urgently, a cash advance is rarely your best option. A personal loan from a bank or credit union usually has a lower interest rate and no upfront fee. You get the money in your account in one to three business days, and you repay it in fixed monthly installments. The APR on a personal loan is typically 6 to 36 percent, depending on your credit score — still lower than a cash advance.
A balance transfer to a card offering 0% APR for an introductory period can work if you need to move money between accounts. You pay a balance transfer fee (usually 3 to 5 percent), but you avoid interest for 6 to 21 months, depending on the card. This only works if you have access to another credit card.
If you are in a true emergency and have no credit access, some employers offer paycheck advances or emergency loans to employees. Credit unions often have lower-cost short-term loans than banks. A payday loan alternative — sometimes called a "payday loan alternative" or offered by credit unions as a "payday alternative loan" — charges less than a payday lender and may have a lower rate than a cash advance, though terms vary widely.
What happens if you cannot pay back a cash advance
If you carry a cash advance balance and make only minimum payments, the interest will compound and the balance will grow. A $300 cash advance can easily become $400 or $500 if you carry it for several months at a high interest rate.
Your card issuer will report the unpaid balance to the credit bureaus, which will damage your credit score. If the balance goes unpaid for 180 days (six months), the card issuer will likely close your account and charge off the debt, meaning they write it off as a loss and may sell it to a debt collector. A charge-off stays on your credit report for seven years.
If you are struggling to pay back a cash advance, contact your card issuer when ready. Some issuers offer hardship programs that lower your interest rate or allow you to pause payments temporarily. It is better to ask for help than to let the balance grow.
Frequently Asked Questions
Can I use a credit card to withdraw money at any ATM?
Most ATMs will accept a credit card for a cash advance, but some ATMs owned by smaller banks or credit unions may not. Your card issuer can tell you which ATM networks accept your card. You will need your PIN to complete the withdrawal.
Is there a difference between a cash advance and a balance transfer?
Yes. A cash advance is money you withdraw as cash. A balance transfer moves debt from one card to another. A cash advance has an when ready fee and high interest; a balance transfer has a fee but may offer 0% interest for a period. They are different transactions with different costs.
What if my credit card does not have a PIN?
You will need to set one up before you can withdraw cash at an ATM. Call your card issuer and ask them to issue you a PIN. Some issuers do this over the phone; others mail it to you. Once you have it, you can use it at any ATM that accepts your card.
Does a cash advance count toward my credit limit?
Yes. If your credit limit is $5,000 and you withdraw a $500 cash advance, your available credit drops to $4,500. The cash advance is a balance on your account, just like a purchase, until you pay it off.
Can I pay off a cash advance faster to reduce interest?
Yes. Any payment you make goes toward your balance, and paying faster reduces the total interest you owe. However, your card issuer may explore payments to your lowest-interest balance first (usually regular purchases) before explore money to the cash advance. Ask your issuer how they explore payments, or request in writing that extra payments go toward the cash advance.